WSR 08-01-079

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed December 17, 2007, 9:14 a.m. , effective January 17, 2008 ]


Effective Date of Rule: Thirty-one days after filing.

Purpose: The purpose of this rule-making order is to amend rules to implement SB 5175 (2007), which modifies the eligibility requirements for retirees, beneficiaries, or eligible ex-spouses of either the Public Employees' Retirement System (PERS) Plan 1 or Teachers' Retirement System (TRS) Plan 1 who receive a cost-of-living adjustment (COLA). Prior to SB 5175, PERS Plan 1 and TRS Plan 1 retirees, beneficiaries, and eligible ex-spouses were eligible for a COLA if they were retired for one year and reached age 66 by July 1 of the year in which the COLA was given. Now, PERS Plan 1 and TRS Plan 1 retirees, beneficiaries, and eligible ex-spouses may receive a COLA if they are retired for one year by July 1 of the year in which they reach age 66. WAC 415-02-350 needs amending to reflect this change.

Citation of Existing Rules Affected by this Order: Amending WAC 415-02-350.

Statutory Authority for Adoption: RCW 41.50.050(5).

Adopted under notice filed as WSR 07-22-095 on November 6, 2007.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 1, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.

Date Adopted: December 17, 2007.

Sandra J. Matheson

Director

OTS-1185.1


AMENDATORY SECTION(Amending WSR 06-18-009, filed 8/24/06, effective 9/24/06)

WAC 415-02-350   What are cost-of-living adjustments (COLA) and how are they calculated?   (1) What is a cost-of-living adjustment (COLA)? The value of a retiree's, beneficiary's, or ex-spouse's monthly allowance may change in the years after retirement because of inflation or other factors. A COLA automatically adjusts benefits based on the cost of living changes.

(2) What retirement plans include COLAs? With one exception, all retirement plans administered by the department provide one or more of the types of COLAs listed in subsection (3) of this section. The judges retirement fund (chapter 2.12 RCW) does not provide a COLA.


RETIREMENT SYSTEM PLAN COLA TYPE STATUTE
JUDICIAL Base RCW 2.10.170
LEOFF Plan 1 Base RCW 41.26.240
LEOFF Plan 2 Base RCW 41.26.440
PSERS Base RCW 41.37.160
PERS Plan 1 Uniform RCW 41.40.197
PERS Plan 1 Optional Auto RCW 41.40.188 (1)(c)
PERS Plan 2 Base RCW 41.40.640
PERS Plan 3 Base RCW 41.40.840
SERS Plans 2 and 3 Base RCW 41.35.210
TRS Plan 1 Uniform RCW 41.32.489
TRS Plan 1 Optional Auto RCW 41.32.530 (1)(d)
TRS Plan 2 Base RCW 41.32.770
TRS Plan 3 Base RCW 41.32.845
WSPRS Plans 1 and 2 Base RCW 43.43.260

(3) What are the types of COLAs?

(a) Auto COLA

The auto COLA, if offered under your plan, is an option you may select at retirement. If you choose this option, your monthly retirement allowance will be actuarially reduced at retirement, and you will receive an automatic adjustment in your monthly retirement allowance each year for the rest of your life. The auto COLA has no age requirement and is limited to a maximum of ((3% times)) three percent of your monthly allowance.

(b) Base COLA

The base COLA is applied in July (April for LEOFF Plan 1) of each year and adjusts the benefit based on the change in the ((CPI)) Consumer Price Index for the Seattle area. Base COLAs are limited to a maximum of ((3% times)) three percent of the monthly allowance for all affected plans except LEOFF Plan 1. ((They are)) During a calendar year, the base COLA is payable to:

(i) Retirees((, beneficiaries, and ex-spouses)) who have been retired for at least one year ((before)) by July 1st of each year (April 1st for LEOFF Plan 1); and

(ii) Beneficiaries or eligible ex-spouses who receive benefit payments from an account that, by July 1st, has paid a monthly benefit for at least one year (April 1st for LEOFF Plan 1).

(c) Uniform COLA

The uniform COLA is an annual adjustment to the benefit, based on years of service. The annual adjustment for the uniform COLA is independent from any other COLA. During a calendar year, it is payable to:

(i) ((Retirees, beneficiaries, or ex-spouses age 66 or older who have been retired for at least one year by July 1st of each year; and

(ii))) Retirees who, by July 1st, have received a retirement benefit for at least one year and who, by December 31st, will have reached age sixty-six or older;

(ii) Beneficiaries and eligible ex-spouses who receive benefit payments from an account that, by July 1st, has paid a monthly benefit for at least one year and who, by December 31st, will have reached age sixty-six or older; and

(iii) Retirees, beneficiaries, or eligible ex-spouses of any age whose retirement benefit is calculated under the minimum formula.

(4) Who is responsible for determining the amount of the COLA? The office of the state actuary (OSA) bases the percentages of the COLAs on the Consumer Price Index. The Index is based on wages earned by urban wage earners and clerical workers in the Seattle-Tacoma-Bremerton, Washington area. OSA provides this information to the department annually.

[Statutory Authority: RCW 41.50.050(5), 2.10.170, 41.26.240, 41.26.440, 41.37.160, 41.40.197, 41.40.188 (1)(c), 41.40.640, 41.40.840, 41.35.210, 41.32.489, 41.32.530 (1)(d), 41.32.770, 41.32.845, 43.43.260. 06-18-009, 415-02-350, filed 8/24/06, effective 9/24/06. Statutory Authority: RCW 41.50.050(5) and chapter 41.45 RCW. 03-06-044, 415-02-350, filed 2/27/03, effective 4/1/03.]

Washington State Code Reviser's Office